Consumers are getting deeply perceptive. Now they are not just going to their bank branch instead increasingly shopping around for the best Mortgage Rates in Mississauga or availing the services of mortgage brokers for even better selection. And it makes sense; comparison shopping can save them thousands in the long run. Deciding if you should go with fixed or variable rate mortgage is onerous as both the options have their areas of dominance and drawbacks. Let’s see what makes a mortgage rate better or the factors that will allow you to compare them for a great selection.
Mortgage Rate Drivers.
For such better understanding and appropriate selection, it is imperative to know about the factors that influence the mortgage rates. By and large, fixed mortgage rate follows the pattern or trend of Canada Bond Yield and bond yields driven by various economic factors like export, inflation, and unemployment prevailing in the country. And these factors equally contribute to the increase and decrease of rates for variable products.
Term and risk involved in your mortgage product.
A Fixed rate mortgage set for 1,3,5, or 10 years. Throughout the term of the fixed rate mortgage, you are going to pay the rate you initially signed, or it’s better to say are not going to be surprised or shocked with the rate change all through your mortgage period.
Further, it exceptionally found that the best Fixed Rate Mortgage products in Mississauga are higher than variable rate products. Your selection of fixed rate over variable rate mortgage is like taking an insurance policy, as it is predictable, select a much less risky option, and this is the reason fixed rates priced higher.
Like fixed rate, variable rate mortgage also set for 1,3,5 or 10 years, but they are priced comparatively at a lower rate than fixed rate mortgages. And the reason for lower variable rates is the risk involved in these products. There is a high possibility of change in variable rates during the term of your mortgage, the Variable Mortgage Rates in Mississauga may increase or decrease as various economic factors also drive them. The risk involved can’t be predicted, and your selection indicates that you are ready to take some risk.
Understanding interest rate calculation and comparison.
Fixed rates are influenced by the movement in the bond market; it increases with an increase in bond prices and decreases with the decline in bond prices. And the spread between the two indicates the risk investors are willing to bear while selecting a secure product.
On the other hand, the best variable rate mortgage products in Mississauga are priced considering the changes in the condition of the money market. That means if the Bank of Canada increases the prime rate the variable rates will go up overnight. But these changes are volatile and occurs hardly once in a month. That obviously indicates that your interest rate will keep changing month on month.
Best option – Fixed or Variable Mortgage Rates
Variable rate mortgage allures for the reason of money savings while fixed-rate offers stability and predictability. People who have a big mortgage and can’t afford the increased monthly payments, fixed rate mortgage is a better choice. And for lower mortgages the variable rates are a better choice, it makes less of a dent in your principal when interest rates are rising.